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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 13 years, the highest Beneish M-Score of Quanta Services Inc was -0.61. The lowest was -3.33. And the median was -2.49.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Quanta Services Inc for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 0.8769||+||0.528 * 1.1151||+||0.404 * 0.9483||+||0.892 * 1.0352||+||0.115 * 0.702|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9942||+||4.679 * -0.0569||-||0.327 * 1.6162|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $1,700 Mil.|
Revenue was 1939.438 + 1872.34 + 1886.956 + 2131.635 = $7,830 Mil.
Gross Profit was 235.215 + 227.505 + 252.661 + 376.354 = $1,092 Mil.
Total Current Assets was $2,363 Mil.
Total Assets was $5,373 Mil.
Property, Plant and Equipment(Net PPE) was $1,126 Mil.
Depreciation, Depletion and Amortization(DDA) was $218 Mil.
Selling, General & Admin. Expense(SGA) was $667 Mil.
Total Current Liabilities was $1,341 Mil.
Long-Term Debt was $348 Mil.
Net Income was 216.388 + 46.109 + 53.484 + 66.576 = $383 Mil.
Non Operating Income was -1.07 + -0.448 + -0.212 + -0.467 = $-2 Mil.
Cash Flow from Operations was 110.209 + 117.556 + 189.227 + 273.301 = $690 Mil.
|Accounts Receivable was $1,873 Mil.
Revenue was 2145.958 + 1838.209 + 1762.574 + 1817.623 = $7,564 Mil.
Gross Profit was 336.903 + 264.209 + 272.071 + 302.843 = $1,176 Mil.
Total Current Assets was $2,536 Mil.
Total Assets was $6,229 Mil.
Property, Plant and Equipment(Net PPE) was $1,388 Mil.
Depreciation, Depletion and Amortization(DDA) was $178 Mil.
Selling, General & Admin. Expense(SGA) was $648 Mil.
Total Current Liabilities was $1,128 Mil.
Long-Term Debt was $83 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(1700.314 / 7830.369)||/||(1873.241 / 7564.364)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(227.505 / 7564.364)||/||(235.215 / 7830.369)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (2362.664 + 1125.501) / 5373.424)||/||(1 - (2536.467 + 1388.134) / 6229.289)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(178.255 / (178.255 + 1388.134))||/||(217.763 / (217.763 + 1125.501))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(667.293 / 7830.369)||/||(648.384 / 7564.364)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((348.209 + 1340.538) / 5373.424)||/||((83.186 + 1128.127) / 6229.289)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(382.557 - -2.197||-||690.293)||/||5373.424|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Quanta Services Inc has a M-score of -3.02 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Quanta Services Inc Annual Data
Quanta Services Inc Quarterly Data